DEFINITION of 'Bank Insurance'

A guarantee by the Federal Deposit Insurance Corporation (FDIC) of deposits in a bank. Created in 1989, the Bank Insurance Fund is the federal fund used to insure bank deposits of national and state banks, that are members of the Federal Reserve System. Bank Insurance helps protect individuals who deposit their savings in banks, against commercial bank insolvency. Each depositor is insured to at least $250,000 per bank.

BREAKING DOWN 'Bank Insurance'

The FDIC, an independent U.S. government corporation, was initiated under the Glass-Steagall Act of 1933. Its purpose was to insure bank deposits against loss and to regulate banking practices. The collapse of a great majority of banks in the United States, during the Great Depression, prompted the creation of the FDIC.

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RELATED FAQS
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    Find out why certificate of deposits (CDs) are insured by the FDIC and what the deposit requirements are for receiving insurance ... Read Answer >>
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    Learn about the Federal Deposit Insurance Corporation (FDIC) and whether its protection extends to 401(k) accounts or just ... Read Answer >>
  3. Does the FDIC cover business accounts?

    Learn what types of business accounts are insured by the FDIC, and find out how much of the deposits made by a business are ... Read Answer >>
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